Cost Basics

Medicare isn’t free. And it’s important to pay attention to more than just monthly premiums. The amount you’ll pay depends on the coverage you choose and the health care services you receive. And don’t forget to see if you may qualify for help with your Medicare costs.

Depending on the Medicare Supplement insurance plan chosen, this is the amount your plan may help pay after Medicare pays.

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Copayment (copay):

A fixed amount that you pay each time you receive a covered service. For example, if you have prescription drug coverage, you might pay $10 each time you fill a certain prescription.

You Pay a Fixed Amount

Medicare Advantage or Prescription Drug Plans: They will be billed for the rest

Coinsurance:

An amount you may be required to pay as your share for the cost of a covered service. For example, Medicare Part B pays about 80% of the cost of a covered medical service and you would pay the rest.

Are there plans that limit out-of-pocket spending each year?

It depends on which type of coverage you have.

Original Medicare (Parts A and B):

No.

Medicare Advantage (Part C) plans:

Yes. After you reach the annual out-of-pocket maximum, your plan will pay all your costs for Medicare-covered services for the rest of the period (usually a calendar year). Costs that do not apply to the annual out-of-pocket maximum include premiums, Part D prescription drugs, and extra benefits that are not covered by Original Medicare.

Medicare Prescription Drug (Part D) plans:

No. But the amount you will pay for your prescription drugs depends on the drug payment stage you’re in:

Drug Payment Stages:

Stage 1: Annual Deductible

You pay for your prescription drugs until you reach the deductible amount set by your plan.

Not all Part D plans have a deductible.

If your plan does not have a deductible, your coverage starts with the first prescription you fill.

Stage 2: Initial Coverage

You pay a copay or coinsurance and the plan pays the rest.

You stay in the initial coverage stage until your total drug costs reach $3,820 in 2019.

Stage 3: Coverage Gap (also called “Donut Hole”)

In 2019, you pay:

25% of the costs for brand name drugs

37% of the costs for generic drugs

You stay in the coverage gap stage until your total out-of-pocket costs reach $5,100 in 2019.

Stage 4: Catastrophic Coverage

You pay a small copay or coinsurance amount.

You stay in the catastrophic coverage stage for the rest of the plan year.

Medicare Supplement insurance plans (Medigap):

Medigap plans help pay for some of the out-of-pocket costs Medicare doesn’t pay. Most Medigap plans don’t have a yearly maximum out-of-pocket limit; two plans currently do. For Plans K and L, after you meet your out -of-pocket yearly limit and your yearly Part B deductible ($183 in 2018), the Medigap plan pays 100% of covered services for the rest of the calendar year.

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What costs can I expect for 2019?

Depending on which type of coverage you have, your costs may be different.

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AARP® encourages you to consider your needs when selecting products and does not make specific product recommendations for individuals.

Please note that each insurer has sole financial responsibility for its products.

AARP® Medicare Supplement Insurance Plans

Insured by UnitedHealthcare Insurance Company, Horsham, PA (UnitedHealthcare Insurance Company of New York, Islandia, NY for New York residents). Policy form No. GRP 79171 GPS-1 (G-36000-4).

In some states, plans may be available to persons under age 65 who are eligible for Medicare by reason of disability or End-Stage Renal Disease.

Not connected with or endorsed by the U.S. Government or the federal Medicare program.

This is a solicitation of insurance. A licensed insurance agent/producer may contact you.

You must be an AARP member to enroll in an AARP Medicare Supplement Plan.

THESE PLANS HAVE ELIGIBILITY REQUIREMENTS, EXCLUSIONS AND LIMITATIONS. FOR COSTS AND COMPLETE DETAILS (INCLUDING OUTLINES OF COVERAGE), CALL A LICENSED INSURANCE AGENT/PRODUCER AT THE TOLL-FREE NUMBER ABOVE.

Medicare Advantage plans and Medicare Prescription Drug plans

Plans are insured through United Healthcare Insurance Company or one of its affiliated companies, a Medicare Advantage organization with a Medicare contract and a Medicare-approved Part Dsponsor. Enrollment in these plans depends on the plan's contract renewal with Medicare.

You must continue to pay your Medicare Part B premium ifnot otherwise paid for under Medicaid or by another third party.

The formulary, pharmacy network, and/or provider network may change at any time. You will receive notice when necessary. This information is not a complete description of benefits. Contact the plan for more information. Limitations, copayments, and restrictions may apply. Benefits, premium and/or copayments/ coinsurance may change on January 1 of each year.